Petrobras, BP Mull Joint Activities - Update with IEA Deal
Brazil's state-run producer Petrobras and UK major BP agreed in a letter of intent (LOI) signed October 18 to find ways to join forces and pursue business opportunities at home and abroad.
The LOI was signed in London by Petrobras' executive director of natural gas and refining Jorge Celestino and BP upstream chief Bernard Looney. Neither company announced it at the time of signing, Petrobras only disclosing its existence October 31.
Petrobras said the agreement is to identify and evaluate jointly with BP: business opportunities involving assets or ventures in Brazil and abroad; areas of co-operation in the upstream, refining, and in gas/LNG transportation and commercialisation, oil trading, lubricants, jet fuel, power generation and distribution, plus renewable energy, technology and low carbon initiatives; and the development of a potential strategic alliance between the two.
BP on October 27 won two licences in Brazil's third pre-salt offshore bid round: the Alto De Cabo Frio Central block (Petrobras operator 50%, BP 50%), and the Peroba block (Petrobras operator 40%, BP 40%, and China National Petroleum Corporation 20%).
BP finance chief Brian Gilvary said at 3Q results October 31 that: "The pre-salt in that part of [Brazil's offshore] Santos basin is interesting for us, and there will be other bid rounds in Brazil." Asked by one analyst if Brazil would become a core producing region for BP, Gilvary replied that more would be disclosed about Brazil in 4Q results this February by Looney but that "the team feels pretty good" about its success in the recent licence round.
Petrobras noted in its October 31 statement that it signed a memo of understanding with CNPC July 4 to form a comprehensive strategic alliance.
The Brazilian producer in just over 14 months has a slew of similar cooperation agreements with Shell, Total, Portugal's Galp and Norway's Statoil.
Update with IEA announcement, October 31:
Brazil joined the International Energy Agency as an Association country, both jointly announced October 31, following a signing by Brazil's energy and foreign ministers, respectively Fernando Coelho Filho and Aloysio Nunes Ferreira, with IEA executive director Fatih Birol in Brasilia. It becomes the IEA's 7th Association country, alongside China, India, Indonesia, Morocco, Singapore and Thailand. These and full IEA members now account for over 70% of the world’s total energy consumption.
Dr Birol also congratulated Brazil for its recent successful deepwater bid round. After depending on oil imports since IEA records began in the 1970s, the IEA said it now estimates that Brazil will become a net exporter this year, and export nearly 1mn b/d oil to world markets by 2022.
A three-year work programme signed by Birol and energy minister Coelho includes sharing best-practices on grid integration, gas market design, and close co-operation on clean-energy initiatives, including through the G20. The IEA said it could learn from "Brazil’s unique experience, which has enabled it to develop one of the cleanest energy mixes in the world."
Mark Smedley